Corporation Tax Act 2009

586Other contracts with embedded derivativesU.K.
This section has no associated Explanatory Notes

(1)This section applies if a company—

(a)is a party to a contract which is neither a hybrid derivative nor a loan relationship, and

(b)in accordance with generally accepted accounting practice, treats the rights and liabilities under the contract as divided between—

(i)rights and liabilities under one or more derivatives (“embedded derivatives”), and

(ii)the remaining rights and liabilities.

(2)The company is treated for the purposes of this Part—

(a)as a party to a relevant contract whose rights and liabilities consist only of those of the embedded derivative, or

(b)if there is more than one embedded derivative, as a party to relevant contracts each of whose rights and liabilities consist only of those of one of the embedded derivatives.

(3)Each relevant contract to which a company is treated as a party under subsection (2) is treated for the purposes of this Part as an option, a future or a contract for differences depending on what the character of a separate contract containing the rights and liabilities of the embedded derivative would be.

(4)See also section 616 (disapplication of fair value accounting for certain embedded derivatives).